How to Handle Medicare Advantage Flex Cards When Calculating Income

Many Medicare Advantage enrollees rely on supplemental benefits to afford essential items like groceries and medical products. Some owners may have mistakenly included all flex card benefits as income, possibly leading to income certifications that may have exceeded the maximum income limit. HUD recently issued updated guidance that provides clarification on this issue. 

In a Frequently Asked Questions (FAQ) document, HUD confirmed that only Flex Card funds used for rent and utilities should be included in income calculations. All other supplemental benefits provided through Flex Cards such as those used for groceries, over-the-counter medications, or transportation should not be counted as income.

What Supplemental Benefits Do MA Plans Offer?

Many Medicare Advantage plans provide supplemental benefits beyond standard Medicare coverage. These benefits must be primarily health-related or qualify as Special Supplemental Benefits for the Chronically Ill (SSBCI), meaning they are designed to improve the overall health and well-being of enrollees. Common Medicare Advantage supplemental benefits include:

• Dental, Vision, and Hearing Coverage. These are services like eye exams, prescription glasses, dental cleanings, and hearing aids.
• Prescription Drug Coverage (Medicare Part D). Many MA plans include drug coverage to help reduce medication costs.
• Wellness and Fitness Programs. These include gym memberships, virtual fitness programs, and health coaching.
• Transportation Assistance. This includes non-emergency transportation to medical appointments.
• In-Home Support Services. These provide assistance with daily living activities, such as meal delivery and home modifications.
• Flex Cards for Eligible Expenses. These are preloaded debit cards that can be used for health-related expenses, groceries, and, in some cases, rent and utilities.

Excluded Benefits

HUD has made it clear that most Medicare Advantage Flex Card benefits should not be counted as income when determining eligibility for rental assistance. Only in cases where an enrollee explicitly uses Flex Card funds to pay for rent or utilities should those amounts be included in income calculations. For everything else, whether it’s groceries, over-the-counter medications, transportation, or other health-related expenses, the funds should remain excluded.

This reverses any approach that treats Flex Card benefits as additional income, even when enrollees never used them for rent or utilities. Unless there is specific evidence or confirmation that a beneficiary has used the funds for housing costs, the amount should not factor into rent determinations.

With regard to verification, HUD says the vast majority of MA supplemental benefits will be excluded from income determinations, and thus do not need to be verified, including benefits on Flex Cards that are used for anything other than rent and utilities. This is because beneficiaries should not be expected to keep a record of all purchases made and may not have straightforward access to such records from vendors that administer benefits through a Flex Card. According to HUD, there would be too many normal commercial transactions, such as using the card when checking out at the grocery store, purchasing a specialized food item recommended by their physician, or paying for over­-the-­counter medication. 

HUD says owners should generally assume that benefits administered through Flex Cards have not been used to pay for rent and utilities unless the owner has information to suggest otherwise, or the enrollee self-reports that they are applying the funds toward housing costs. If a family reports that they receive MA benefits to help pay for rent and utilities, owners must attempt to collect third-party documentation of the expenses and may accept the self­-certification when third­-party documentation isn’t available.